Manufacturers look abroad for customers, new markets

Jody Somers/For The Star-LedgerEtienne Grignard, right, managing director of Grignard, a manufacturer of chemicals for theatrical fog and industrial cleaning products, speaks with Jorge Silva-Puras, center, regional administrator for the U.S. Small Business Administration, and U.S. Senator Robert Menendez, left, at Grignard last month in Rahway, NJ, during a press conference and tour of the facility.

As the number of new homes being built in New Jersey began to fall in late 2006, so too did Doug West’s manufacturing shop’s sales to contractors.

By the next August there were hardly any construction sites that needed Cordes Machine Division’s equipment to cut and shape wood.

The Mountainside company’s staff is a quarter the size it was five years ago at less than 10 people and West, an engineer and the company’s vice president, said he won’t even entertain the idea of new hires until sales improve.

West said his company has managed to stay afloat by selling machines and parts to buyers in Australia, the U.K. and Canada.

"Canada seems to be booming right now. The U.S. dollar has dropped in value," he said, "so they’re basically buying at a discount when they purchase our U.S.-made products."

As the economy struggles to gain traction, New Jersey manufacturers have focused on expanding their market overseas. But exports aren’t the antidote to what ails every struggling firm. It’s hard to court foreign customers with a product that’s done just OK in the U.S.

New Jersey exports totaled $32.2 billion in 2010, an 18 percent increase over 2009, according to the International Trade Administration. This year’s first quarter showed foreign sales were up 22 percent from the same time last year.

Grignard Company in Rahway was doing well at its Staten Island location in 2009, but needed more space to avoid stifling its growth and to move closer to its vendors.

The company, which makes lubricants, industrial cleaners and liquid used to create fog for theatrical productions, applied for and received a $2.4 million loan through the Small Business Administration.

During a tour of its new facilities with Sen. Robert Menendez (D-N.J.) last month, Etienne Grignard, the company’s managing director, said the company now has actually had to turn down business.

The firm has grown significantly, 20 percent since last year said Grignard, and its new markets spur product development.

"Some companies produce a product, then go look for customers to buy it. We do just the opposite," he said. "Staying open to new ideas and new markets has helped us maintain consistent growth."

Jorge Silva-Puras, the administration’s region 2 administrator, said stories like Grignard’s make him optimistic about the potential for small companies that just a few years ago were struggling.

"We’re seeing a renaissance in the manufacturing sector, here in New Jersey," said Silva-Puras.

But Jeff Scheininger, the newly installed chairman of the New Jersey Chamber of Commerce, said he wouldn’t use the word "renaissance," choosing instead to say that some firms have stabilized or are ready to start recovering.

As president of Flexline, a metal hose manufacturing firm in Linden, he’s seen a lot of local manufacturers shutter since the recession.

"We don’t have the customer base in New Jersey that we used to have," he said. "We’ve had to sell much farther afield than we ever did."

That’s led him to sell a lot of hoses and pipes in Europe.

"Certainly for those companies that were New Jersey-centric, they have to look outside," he said. "It’s just not viable to expect that you can exist in the manufacturing realm within the confines of the state."

Building a reputation in the state is still crucial to expanding into foreign markets, said Joel Reynoso, director of the U.S. Export Assistance Center in Newark. He often tells people starting businesses with the intent to export that they’re going to have an uphill battle.

"If they don’t have the product they want to export at least doing OK before exporting, it’s harder to start doing it," he said.

The center helps small companies like Cordes, Grignard and Flexline turn their history of success into foreign business options and keeps them abreast of legislation that impacts their prospects, like the pending free trade agreement with Korea.

Reynoso has the numbers on his side: Small- and medium-sized companies accounted for more than 97 percent of U.S. exporters last year, according to the export center. But some firms intentionally avoid it.

Small business owners usually regard foreign customers with hesitation, Reynoso said, anticipating endless paperwork, high costs and payment issues that they don’t have the resources to resolve.

He’s still noticed an uptick in interest at seminars, and for good reason.

"There are many economies that haven’t experienced a recession," said Reynoso, "so they’re looking to us for their goods."
Stacy Jones: (973) 392-7969 or stacy_jones@starledger.com